Intel buys U.K. graphics chip team

LONDON – Intel is paying $50 million to multimedia hardware company Creative Technology to license certain patents belonging to Creative subsidiary ZiiLabs Inc. Ltd. and to acquire its U.K. subsidiary ZiiLabs Ltd., formerly known as 3DLabs Ltd.

The move by Intel Corp. (Santa Clara, Calif.) is said to be part of efforts to de-emphasize the use of PowerVR graphics cores licensed from Imagination Technologies Group plc (Kings Langley, England) in future Atom processors.

The deal includes $20 million to Creative Technology Ltd. (Singapore)
for the licensing of technologies including ZiiLabs graphics processing
unit (GPU) technology and $30 million for the acquisition of the U.K.
based design team. This design team is engaged in, primarily on behalf
of ZiiLabs Inc. Ltd., the development of ZMS chips for Creative.

Creative acquired 3DLabs Inc. in 2002 for about $170 million, at the time the company was a Nasdaq-listed developer of graphics chips for workstations but with much of its engineering base still in the U.K..

"Moving forward, it will be more cost effective for Creative to outsource to third-party contract chip-layout houses on future advanced chips for its products, while at the same time allowing Creative to focus on its core strength - the designing and marketing of more innovative and exciting products for our customers," said Sim Wong Hoo, CEO of Creative Technology, in a statement. "We will be engaging in discussions to further monetize this valuable collection of 100-plus patents," Sim Wong Hoo added.

Under the terms of the deal ZiiLabs Inc. Ltd. will remain a wholly-owned subsidiary of Creative and will retain ownership of the StemCell media processor patents and will continue to supply ZMS chips.

Intel and Creative have been collaborating on an advanced motion-sensing camera and are in discussions on technology for media-rich tablet products, Creative said. The Creative transaction is expected to close before the end of 2012.

Interestingly 3DLabs licensed its entire patent portfolio to Intel in 1999 for about $7.5 million.